It really, truly, is not a sure bet that interest rates will rise in the near future, although most people you ask would beg to differ.
Interest rates are up a bit this year. Does that mean they will keep going up?
I remember in 2002 when interest rates hit record lows. The general narrative at that time was, if we knew one thing, it was that rates would be going up.
……that was 11 years ago.
If we knew something was sure to happen in the financial markets…
…it would have happened already. As I discussed in an earlier post, if traders really knew rates were sure to go up, then they already would have moved up in anticipation. By definition, the market price is the exact level where opinions about the future are evenly divided. I can absolutely assure you, there is an equal amount of money betting that rates will go down as there is that rates will go up. This is how we arrive at the current market level.
So don’t be so sure you know where interest rates, or for that matter any financial investment, will go. When constructing an investment portfolio to span multiple generations, the only thing that is certain is uncertainty. We help clients construct portfolios accordingly.